Backus Hospital nearly doubles goal of revenues over expenses

Norwich - Despite a difficult year for many hospitals nationwide, The William W. Backus Hospital achieved a 9.22 percent operating margin of revenues over expenses in fiscal 2013 by curtailing costs and reducing waste.

"Fiscal 2013 was a brutal year in our industry, but in the midst of a challenging and tumultuous health care landscape, we remain strong," Anthony Joyce, chairman of the hospital's board of directors, said at the annual meeting Wednesday.

This annual meeting was the first in the hospital's 120-year history to be open to the press, and also the first since its affiliation with Hartford HealthCare in August. Continuing its long-standing pattern of financial health, Backus generated a $25.4 million operating margin that was almost twice the amount it set for its goal at the beginning of the fiscal year, which ended Sept. 30.

Total revenues of $275.2 million were about $8 million less than the previous year, but the operating margin remained strong by "bending the cost curve and making some difficult and sometimes painful" decisions to cut expenses, Joyce said. Among these, the hospital last week announced layoffs of 10 senior and mid-level management positions and elimination of more than a dozen other jobs through vacancies and retirements.

Elliot Joseph, president of Hartford HealthCare, said challenges facing hospitals include the "dramatic reduction" in government payments for health care, declining demand and increasing cost-consciousness by patients.

"Consumers will increasingly look for value in health care," he said, noting that doctors are now being asked by patients regularly how much a particular test or procedure will cost, a question they rarely heard until recently.

Statewide, he said, patient volume fell about 3.5 percent in the past year. At Backus, inpatient admissions fell from 10,974 in 2012 to 10,573 in 2013, while inpatient and same-day surgeries also declined. Emergency Department visits, however, increased by almost 10,000 patients, to 78,842 in 2013.

As part of Hartford HealthCare, Backus is one of five acute care hospitals and several affiliated organizations that will work together to control costs and improve quality, Joseph said, to ensure that the Hartford, central and eastern Connecticut regions have a "sustainable, local, affordable health care system."

"Health care is too expensive," Joseph said. "But there is enough money in the health care system to do this right" through redistribution of resources.

While the hospital received several awards in 2013 for various quality measures, David Whitehead, president and chief executive officer of Backus, said the most significant achievement was a new routine of 15-minute "daily safety huddles" each morning. Patient care and administration leaders gather to discuss what happened in the last 24 hours and how to respond to ensure that the hospital continues to provide exceptional care, Whitehead said.

"It's the best thing we've ever done," he said. "It allows us to make rapid cycle changes. It's been a whole cultural change." The hospital also embarked on a "Safety Starts with Me" program for staff to reduce errors and improve patient safety.

In the coming year, the hospital is planning to create a center for preventive medicine and begin a "Backus Delivers" campaign that would include sending health coaches out into the community to work with patients one on one.

"We're moving from sick care to health care, from volume to value," Whitehead said. "It's the only bottom line that matters."